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As operations manager of Holz Fumiture, you must make a decision about adding a line of rustic future in discussing the possibilities with your

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As operations manager of Holz Fumiture, you must make a decision about adding a line of rustic future in discussing the possibilities with your sales manager, Steve Gilbert, you decide that there will definitely be a market and that your from should enter that market. However, because rustic fumiture has a different frish than your standard offering, you decide you need another process line. There is no doubt in your mind about the decision, and you are sure that you should have a second process. But you do question how large to make it A large process line is going to cost $425,000; a small process t will cost $325 The question, therefore, is the demand for nato tuntune After extensive discussion w Gibert and Tim land of Ireland Market Research, Inc. you determine that the best estimate you can make is that there is a two-out-of-three chance of high demand resulting in $650.000 proft bom sales and i demand resulting in $300,000 profe from sales With Free charce a large process ine, you could handle the high figure of $650,000. However, with a small process Ine you could not and would be forced to expand at a cost of $175,000), wer which time your proft ton sales would be 5000.000 rather than the $650,000 because of the lost time in expanding the process. If you do not expand the small process, your profit from sales would be held to $425.000. If you build a small process and the demand is low, you can handle all of the demand The best option is to open a large Ine

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